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We are in a “new normal” environment with a future of low returns and high volatility. The Fed is pledging to keep short-term interest rates near zero through mid-2013. [Nevertheless,] in this low-yield world, there are still plenty of large ETFs offering yields higher than the 10Year Treasuries. [Let me explain in detail below.] Words: 723
So says Hao Jin in an article* posted on SeekingAlpha.com which Lorimer Wilson, editor of www.munKNEE.com (It’s all about Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Jin goes on to say in the article:
Large ETFs with Yields Higher Than 10-Year-Treasury
There are 1,256 ETFs in Yahoo Finance’s ETF Center. Of the biggest 50, the following 17 ETFs have higher yields than the 10-year Treasury:
| Fund | Net Assets | Yield | Expense Ratio |
| SPDR Barclays Capital High Yield Bond (JNK) | 7.33B | 10.2% | 0.40% |
| iShares iBoxx $ High Yield Corporate Bd (HYG) | 8.90B | 8.2% | 0.50% |
| iShares S&P U.S. Preferred Stock Index (PFF) | 8.10B | 7.3% | 0.48% |
| iShares MSCI Brazil Index (EWZ) | 12.16B | 5.6% | 0.61% |
| Vanguard MSCI European ETF (VGK) | 8.13B | 5.2% | 0.14% |
| iShares iBoxx $ Invest Grade Corp Bond (LQD) | 14.23B | 4.6% | 0.15% |
| iShares Barclays TIPS Bond (TIP) | 21.95B | 4.2% | 0.20% |
| Vanguard Intermediate-Term Bond ETF (BIV) | 12.32B | 3.7% | 0.11% |
| Vanguard REIT Index ETF (VNQ) | 20.99B | 3.6% | 0.12% |
| iShares Barclays Aggregate Bond (AGG) | 12.25B | 3.3% | 0.20% |
| iShares MSCI EAFE Index (EFA) | 39.24B | 2.9% | 0.35% |
| Vanguard MSCI EAFE ETF (VEA) | 8.96B | 2.7% | 0.12% |
| Vanguard Value ETF (VTV) | 15.12B | 2.7% | 0.12% |
| SPDR Dow Jones Industrial Average (DIA) | 9.99B | 2.5% | 0.18% |
| Vanguard FTSE All-World ex-US ETF (VEU) | 14.06B | 2.4% | 0.22% |
| iShares Russell 1000 Value Index (IWD) | 11.22B | 2.3% | 0.20% |
| iShares FTSE China 25 Index Fund (FXI) | 6.77B | 2.3% | 0.72% |
(The above data is from CNBC, Forbes and Yahoo Finance, and is valid as of August 28, 2011)
Conclusion
The weakness of advanced economies means markets will remain subject to policy intervention for an indefinite period, distorting asset prices to such an extent that valuations will defy logic and thus heighten volatility. Yields on emerging markets’ debt are far higher than most Western bonds, despite the fact that it is actually EM countries that have the most robust balance sheets and therefore are arguably far less vulnerable to default risk…
The same applies to equity markets. With US Congress focused on shrinking the deficit through budget cuts, it is unlikely that the U.S. government could stimulate the economy with new spending. Emerging markets such as Brazil and China have higher growth rates and lower unemployment than the US.
Investors could diversify their portfolios by investing in a broad range of emerging-market ETFs with high yields.
* http://seekingalpha.com/article/290439-17-large-etfs-yielding-better-than-the-10-year-treasury?source=email_portfolio
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Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.